How to Choose the Right Dealer? (Part I)
Almost 90% of the investors enter currency markets as short term speculators. Most of the investors look for quick capital gains in forex. Many start forex day trading as a speculative venture. If you have made the positive decision to start forex trading, your first step should be choosing the right forex broker. This is very important. The right choice of a forex broker will greatly influence your success as a forex trader.
Now days, the market is overcrowded with companies and banks offering online forex brokerage services to individual retail traders and small investors to access the currency markets. It will not be easy for you to make the right choice without a certain set of criteria. These criteria will mostly depend on your interests, preferences and means as an individual trader depending on your trading strategies and tactics.
You may ask, what is the best way to choose the right broker? You should compose a list of questions to ask the forex broker before making a final decision. The following are some of the suggested questions that you should ask. You should ask these questions before making a final decision.
What is the amount of the interday and overnight margin and corresponding leverage? Many good online forex brokers offer margin between 2-5%. They provide leverage ranging from 20:1 to 50:1. Higher margin requirement means lower investment efficiency.
However, lower margin means that most of the time the forex broker will be against you as a trader and will do everything possible to prevent you from winning. It will become difficult for you to work under such conditions. You will face many trading problems with such a broker.
What is the minimum contract size? Now days, the standard contract size is $100,000. This contract size is quite affordable and allows for reasonably effective money management with limited capital. This contract size also allows small individual investors to participate in currency speculation.
What are the requirements of minimum deposit? The investment and financial means of traders differ. It is common that many new traders dont have sufficient funds to open an account. In my opinion, the optimal minimum amount is $10,000 with 2% margin requirement. I think $10,000 is the required minimum amount corresponding to the forex market conditions.
What are the terms and conditions of setting and executing stop and limit orders? The ideal condition should be the execution of the stop and limit orders at the fixed price. This should be regardless of the speed or direction of the market conditions. Good forex dealers provide this type of execution. Most brokers reserve the right to fulfill an order with slippage under unsteady market conditions. Conditions mostly defined by the broker themselves.
The value of slippage depends on the current state of the market. It can fluctuate from a few pips to tens of pips. Although it is practically impossible to arbitrate the price received from the broker during the transaction. The slippage creates favorable conditions for the abuse of the trader by the broker. - 23226
Now days, the market is overcrowded with companies and banks offering online forex brokerage services to individual retail traders and small investors to access the currency markets. It will not be easy for you to make the right choice without a certain set of criteria. These criteria will mostly depend on your interests, preferences and means as an individual trader depending on your trading strategies and tactics.
You may ask, what is the best way to choose the right broker? You should compose a list of questions to ask the forex broker before making a final decision. The following are some of the suggested questions that you should ask. You should ask these questions before making a final decision.
What is the amount of the interday and overnight margin and corresponding leverage? Many good online forex brokers offer margin between 2-5%. They provide leverage ranging from 20:1 to 50:1. Higher margin requirement means lower investment efficiency.
However, lower margin means that most of the time the forex broker will be against you as a trader and will do everything possible to prevent you from winning. It will become difficult for you to work under such conditions. You will face many trading problems with such a broker.
What is the minimum contract size? Now days, the standard contract size is $100,000. This contract size is quite affordable and allows for reasonably effective money management with limited capital. This contract size also allows small individual investors to participate in currency speculation.
What are the requirements of minimum deposit? The investment and financial means of traders differ. It is common that many new traders dont have sufficient funds to open an account. In my opinion, the optimal minimum amount is $10,000 with 2% margin requirement. I think $10,000 is the required minimum amount corresponding to the forex market conditions.
What are the terms and conditions of setting and executing stop and limit orders? The ideal condition should be the execution of the stop and limit orders at the fixed price. This should be regardless of the speed or direction of the market conditions. Good forex dealers provide this type of execution. Most brokers reserve the right to fulfill an order with slippage under unsteady market conditions. Conditions mostly defined by the broker themselves.
The value of slippage depends on the current state of the market. It can fluctuate from a few pips to tens of pips. Although it is practically impossible to arbitrate the price received from the broker during the transaction. The slippage creates favorable conditions for the abuse of the trader by the broker. - 23226
About the Author:
Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading and swing trading stocks and currencies. Learn Forex Nitty Gritty. Develop your own Forex Trading System.
posted by X - Men @ 1:39 AM
0 Comments
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home